Recent findings from the Federal Reserve’s Economic Well-Being of U.S. Households survey indicate a significant increase in financial stress among parents. Currently, only 65% of parents with children under 18 report they are “doing OK financially or living comfortably,” reflecting a decline of 10 percentage points since 2021. In juxtaposition, 76% of adults without children express similar financial wellbeing, suggesting a stark contrast in the economic experiences of families versus individuals.
The recent increase in living costs, most notably since the onset of the COVID-19 pandemic, is a contributing factor to this financial strain. Michelle Holder, an associate professor of economics at John Jay College, asserts that when accommodating children, household expenses escalate significantly. Rising costs for essentials such as food, clothing, and notably, child care, compound the financial pressure on parents.
Suzanne Kahn, senior vice president at the Roosevelt Institute, points out that the financial difficulties faced by parents are not merely a consequence of pandemic-related inflation but are deeply rooted in longstanding systemic issues. She emphasizes that the absence of affordable child care and the lack of paid family and sick leave have created an untenable situation for many families. In fact, the cost of child care is nearly 30% higher now than it was before the pandemic, further exacerbating the inequality between families with children and those without.
Kahn highlights the ripple effects of these financial pressures on labor participation rates, as families are forced to make difficult choices regarding employment. Many caregivers are compelled to prioritize home responsibilities over participation in the workforce due to exorbitant child care costs. This trend raises concerns not only for individual families but also for the broader economy. An entire segment of potential workers remains sidelined, adversely affecting workforce productivity and economic growth.
As the challenges facing parents continue to mount, the need for greater advocacy for family-friendly policies becomes increasingly urgent. Initiatives aimed at expanding affordable child care and more comprehensive support for working families could significantly alleviate the financial burdens currently experienced by many parents, fostering a more equitable environment for all members of society.
